Firm euro and Australian dollars assisted the New Zealand dollar to maintain its firm tone as the negative trend for the US dollar continued.
The kiwi finished at 42.52USc from 42.10c on Monday.
"The euro has gone past that 88USc level which is a psychological barrier and it's stabilised," a dealer said.
"Basically, the kiwi has followed the euro up on the back of a weaker US economy, and the aussie has kept up there as well, passing that 54USc mark. So that's all aided the kiwi."
Buyers were from both on and offshore, although volumes were light.
The kiwi, at its highest point since mid-September, is 7.5 per cent, or 3USc, up from its low in November after sentiment turned against the formerly invulnerable greenback.
National Bank chief economist Brendan O'Donovan said the kiwi's gain derived from continuing uncertainty over the outcome of the US presidential election, and it was also "piggybacking" on the strong recovery of the Australian dollar and euro as the American economy faltered.
"We're getting some fairly clear signals the superstar US economy is wearing off and that's having a positive effect on the kiwi," Mr O'Donovan said.
Today's monetary policy statement from the Reserve Bank is unlikely to trigger volatility, as the market is settled on no change to the official cash rate.
- NZPA
<i>Currency:</i> Kiwi breaks through 42.5USc
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